Tokenization for SMEs as a form of alternative financing

How does tokenization work for SMEs? The European DEUSS (Digital EU Securities Service) project, of which Spain is a member, promotes new forms of alternative financing for small and medium-sized enterprises. This is a breath of fresh air, allowing them to save costs, enter the market more efficiently, and therefore become more competitive.

Alfredo Muñoz, Of Counsel in the Blockchain, Digital Assets and Web3 area, comments in El Español that tokenization for SMEs “allows certain financial instruments, such as shares, bonds or investment fund units, to be represented in a DLT and traded in trading centers developed on this technology, with significant time savings and reduced costs and intermediaries.”

For our expert, the direct impact of this project for SMEs is the ease of “their incorporation into these markets, as they can issue debt (bonds) or equity to be traded on supervised markets that can be 24/7 and P2P, with mitigation of financial risks, full transparency and, as we have mentioned, a substantial reduction in issuance and trading costs.” 

Other alternatives in tokenization for SMEs include “protecting the position of the pledgee, and even the tokenization of credit rights, which facilitates their transfer, management, and collateralization,” adds our lawyer.

As a conclusion on alternative financing for SMEs, Muñoz highlights: “Tokenization opens up significant financing possibilities for SMEs, and usability should not be an obstacle to its implementation, as it can be easily solved thanks to the technology itself.”